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Posted on 04/03/2010 6:00:07 AM PDT by Candor7
It couldn't have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation's domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It's the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose - the law now says so. Capital Controls are now here and are now fully enforced by the law.
Let's parse through the just passed law, which has been mentioned by exactly zero mainstream media outlets.
Here is the default new state of capital outflows:
(a) IN GENERAL.—The Internal Revenue Code of 1986 is amended by inserting after chapter 3 the following new chapter:
‘‘CHAPTER 4—TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS ‘‘Sec. 1471. Withholdable payments to foreign financial institutions. ‘‘Sec. 1472. Withholdable payments to other foreign entities. ‘‘Sec. 1473. Definitions. ‘‘Sec. 1474. Special rules. ‘‘SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL INSTITUTIONS.
‘‘(a) IN GENERAL.—In the case of any withholdable payment to a foreign financial institution which does not meet the requirements of subsection (b), the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment.
Clarifying who this law applies to:
‘‘(C) in the case of any United States account maintained by such institution, to report on an annual basis the information described in subsection (c) with respect to such account, ‘‘(D) to deduct and withhold a tax equal to 30 percent of—
‘‘(i) any passthru payment which is made by such institution to a recalcitrant account holder or another foreign financial institution which does not meet the requirements of this subsection, and
‘‘(ii) in the case of any passthru payment which is made by such institution to a foreign financial institution which has in effect an election under paragraph (3) with respect to such payment, so much of such payment as is allocable to accounts held by recalcitrant account holders or foreign financial institutions which do not meet the requirements of this subsection.
What happens if this brand new law impinges and/or is in blatant contradiction with existing foreign laws?
‘‘(F) in any case in which any foreign law would (but for a waiver described in clause (i)) prevent the reporting of any information referred to in this subsection or subsection (c) with respect to any United States account maintained by such institution—
‘‘(i) to attempt to obtain a valid and effective waiver of such law from each holder of such account, and ‘‘(ii) if a waiver described in clause (i) is not obtained from each such holder within a reasonable period of time, to close such account.
Not only are capital flows now to be overseen and controlled by the government and the IRS, but holders of foreign accounts can kiss any semblance of privacy goodbye:
‘‘(c) INFORMATION REQUIRED TO BE REPORTED ON UNITED STATES ACCOUNTS.— ‘‘(1) IN GENERAL.—The agreement described in subsection (b) shall require the foreign financial institution to report the following with respect to each United States account maintained by such institution: ‘‘(A) The name, address, and TIN of each account holder which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity. ‘‘(B) The account number. ‘‘(C) The account balance or value (determined at such time and in such manner as the Secretary may provide). ‘‘(D) Except to the extent provided by the Secretary, the gross receipts and gross withdrawals or payments from the account (determined for such period and in such manner as the Secretary may provide).
The only exemption to the rule? If you hold the meager sum of $50,000 or less in foreign accounts.
‘‘(B) EXCEPTION FOR CERTAIN ACCOUNTS HELD BY INDIVIDUALS.—Unless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if— ‘‘(i) each holder of such account is a natural person,and ‘‘(ii) with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.
And, while we are on the topic of definitions, here is how "financial account" is defined by the US:
‘‘(2) FINANCIAL ACCOUNT.—Except as otherwise provided by the Secretary, the term ‘financial account’ means, with respect to any financial institution— ‘‘(A) any depository account maintained by such financial institution, ‘‘(B) any custodial account maintained by such financial institution, and ‘‘(C) any equity or debt interest in such financial institution (other than interests which are regularly traded on an established securities market). Any equity or debt interest which constitutes a financial account under subparagraph (C) with respect to any financial institution shall be treated for purposes of this section as maintained by such financial institution.
In case you find you do not like to be subject to capital controls, you are now deemed a "Recalcitrant Account Holder."
‘‘(6) RECALCITRANT ACCOUNT HOLDER.—The term ‘recalcitrant account holder’ means any account holder which— ‘‘(A) fails to comply with reasonable requests for the information referred to in subsection (b)(1)(A) or (c)(1)(A), or ‘‘(B) fails to provide a waiver described in subsection (b)(1)(F) upon request.
But guess what - if you are a foreign Central Bank, or if the Secretary determined that you are "a low risk for tax evasion" (unlike the Secretary himself) you still can do whatever the hell you want:
‘‘(f) EXCEPTION FOR CERTAIN PAYMENTS.—Subsection (a) shall not apply to any payment to the extent that the beneficial owner of such payment is— ‘‘(1) any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing, ‘‘(2) any international organization or any wholly owned agency or instrumentality thereof, ‘‘(3) any foreign central bank of issue, or ‘‘(4) any other class of persons identified by the Secretary for purposes of this subsection as posing a low risk of tax evasion.
One thing we are confused about is whether this law is a preamble, or already incorporates, the flow of non-cash assets, such as commodities, and, thus, gold. If an account transfers, via physical or paper delivery, gold from a domestic account to a foreign one, we are not sure if the language deems this a 30% taxable transaction, although preliminary discussions with lawyers indicates this is likely the case.
And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.
Congratulations bankrupt America - you are now one step closer to a thoroughly non-free market.
Full HIRE Act text: ( at link)
Sooooooo, let’s see if I understand this correctly.
If one earns $100 and pays the US taxes (income, payroll, unemployment, maybe HC, etc.), which is about 40%, $60 are clear.
When one sends the $60 to a bank account abroad, 30% of it, $18, is held by the government resulting in $42 reaching that account. Deduct currency conversion/fees/etc. and that person will be “lucky” to have $40 worth out of the taxed $100 he/she earned and paid IRS taxes on it already!
IOW, one pays 60% minimum, depending on the person’s tax bracket.
Soros shouldn’t be happy about this. Oh, wait a minute, it’s his agenda not 0kaka’s; therefore, a patriot like Soros must be exempt from this progressive plague.
.
Awesome post. Keeping that one.
“Never forget” takes on a new meaning.
Never forget who we are, what we believe, who’s counting on us.
Never again.
Also... Time to remember Winston Churchill...
“Maybe NOW would be a good time to look at how Mr. Dunham was never qualified to be POTUS in the first place so that every bill he signed into law can be rescinded.”
Yep.
ping
Great post!
Many Americans left other countries to come here and be free of tyranny. Those are the people who won’t run again, guaranteed!
Enough said!
So what if a country like Switzerland still says no?
pinging sir drill
I agree. The goal is to make damned sure the United States is no longer capable of being a world power.
This debt is being piled up to hobble the U.S., even if good people do regain control. They’ll have to service that debt, with no income source, and so many dependents it would gag a healthy nation.
This guy has his knife hilt deep in the back of Uncle Sam.
Perhaps not, but let’s call it by it’s real name. No euphemisms.
1984 was never a blueprint to build society on.
In real life,any system based on this will end up like the Soviet union.Shattered to pieces within a few years.
“No euphemisms.”
I would be happy if this president allegedly so committed to transparency would simply own up to promoting “crony capitalism.” At that point it’s straightforward to explain that crony capitalism and fascism are equivalent. But until then, I fear that allegations of fascism simply will continue to be ridiculed by the usurper-in-chief and his minions in the MSM as self-evidently loony (not to mention racist).
I just can’t see foreign banks complying with this.
We are soon at the point where sane Americans are opening acconts with the Bank of China or State Bank of India - because they will be the ones most likely to tell the US Treasury Dept. to go to Hell.
[That’s Chicago politics. It’s what you might expect from Obama, Emanuel, and Axelrod.]
And Nitti, Capone, and others.
When will it stop????
Anti-Obama, Oat Cell Sarcasm Torpedo . FIRE!!
When the lung cancer gets him.
(He's a smoker, right? I wouldn't wish this disease on my worst enemy. This is why even "The One" should quit smoking NOW.)
NO Cheers, unfortunately.
This is *exactly what Hitler and Mussolini did. And the U.S. is rapidly approaching the level of government control of private industry seen in Venezuela.
I had a moment of clarity last night that really shook me - and it wasn’t the first time. Just the strongest. This is not a Sinclair Lewis novel (”It Can’t Happen Here”), nor a Bizarro World comic. It’s real. It’s here. It’s in OUR country. Now. And God help us, it’s going to be the fight of our lives to save the shining city on the hill.
I know the Founders may have been too modest to see what a brilliant collection of minds and hearts they were. Who’s to say that millions of Americans who see that we’re at this critical juncture in our history are not collected for a renewal of that founding? We CAN’T step away, turn away. It’s our obligation as Americans to preserve this miracle of liberty.
Now is not the time to be a “summer soldier or the sunshine patriot.” The statement upthread is exactly correct - the United States of America is the prize of tyrants everywhere. They can’t have it.
“If we lose freedom here, there is no place to escape to. This is the last stand on Earth.” - Ronald Wilson Reagan
Excellent discussion going on here! Now, how do we fight?
Thanks.
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